Transcripts For CNBC Squawk Box 20171005

Gain today, you will be seeing the longest winning streak in more than four years because of the numbers of gains weve seen. The s p 500 and nasdaq gained for the last seven sessions in a row. The dow up for six this is the third month in a row that the dow put together a lengthy winning streak another day of new gains, another day of record closes it hasnt been a year since the election has not 24 those are numbers that have always im pining for the mid 90s. Longing for the days. 35 three straight years. Never happen again probably. People say never say never people in ray seal estate say please let there another boon. We have been told for years, 6 , 7 , thats all you get longterm average, 6 , 7 . It will regress, revert to the mean 6 , 7 is all you get. 24 . Things always look best before its been a run a really good run. We saw one of the reasons yesterday was you heard liesman with our survey. The highest level for optimism ever it helps to unshackle American Business it just does you can argue, you can say no, we need guardrails, regulations are good if you overregulate and dont allow companies to do what they do, you dont do as well usually pendulum swings the pendulum is swinging 24 . Overnight in asia, markets in hong kong, shanghai and south korea were closed for a public holiday. The nikkei was up barely i thought it was 1. 9 . 1 p it was 1. 9 points. Some early trading in europe, you can see things are mixed the dax is down by a quarter percentage point cac is slightly weaker in france the ftse up by a tenth of a percentage point bigger gains in spain which did see pressure earlier in the week because of the vote that went down there you can check out wti. This morning up 11 cents to 50. 10. Saudi arabias oil minister saying russia helped to breathe new life into opec, and shale can be a major contributor in the market in the years to come. He was making those comments at the Russia Energy meeting in moscow yesterday, wti closed below 50 dollars. This after a jump in u. S. Crude exports that was unexpected. A record 2 Million Barrels a day. On todays wall street agenda, you said i probably should have said who was on the show im going to mention who is speaking today now in terms of fed speak. How many people total in the country do you think will recognize we have the best viewers in the word. We do smart viewers. Here we go. Okay. I would say 25 of the viewers at least our viewers will. Lets say youre some other morning show or something, and youre trying to make it as compelling as you can for to get as many viewers as you can get, this is not what you would probably these are not people you mention. We have weekly jobless claims, International Trade data are out at 8 30 a. M. Eastern factory orders at 10 fed speak. Jerome powell. Powerful guy. He has been a person who has sort of been in fed chair Janet Yellens corner on a lot of the moves. But hes a republican he is he may be the next one he will talk today also if i say john williams, most people would think of somebody else. Hes the San Francisco fed president. Hell be talking today got the Kansas City Fed president , Esther George talking. Philly fed president , Patrick Harker are all speaking today. This is the important one Patrick Harker will be on our show at 8 30 a. M. Eastern. But you have to be a nerdy business you have to be smart. The most important thing is where Interest Rates are is there more than 100,000 people in the country interested 500,000 . 1 million . All the smart people who realize where the market is headed based on some of these things the people who care about the economy. What motors and powers our country. Im not unhappy about it, but we have to know our audience we have to be pleased. If we get 200,000, 300,000 people, are we happy were happy. Theyre all the type of people that attract highend advertising. This will help them in their lives. Right okay thats populist youre populist im populist . Youre converting fed speak into how people can manage their lives, do better with their retirement and pay for education. This place started as a consumer news and business channel. We had reporters squeezing grapefruits out in the super markets in 1989. Seriously yes consumer news. Bill ackman says that adp shareholders are on his side as he pushes for seats on the companys board in a heated proxy fight. He sat down with jim cramer on mad money last night he explained why hes seeking changes. Why is it that adp has lower revenue productivity than all of their competitors . Adp has an average of generates 160,000 per revenue the competitors average 224,000. Straightforward question, when you think about adp, it has enormous scale if anything they should have more efficiency. Its all about the opportunity for improvement. Adp is a Great Company has done well over a long period of time but massively underachieved its potential. Shares of adp wobbled around, but right now 111. 40 was the last trade google announcing a new lineup of products the company doubling down on its commitment to the hardware business as it tries to compete with devices from amazon and apple. The new devices are a new Google Home Mini and google home max. The speakers run from 200 to 400 and also two new phones. The pixel 2, 600. And the pixel 2, 850. And the pixel bud head phones can translate 40 languages in real time. Alphabet closed up yesterday, 967. 77. I already made the joke i will get a pair of those when im talking to wilfred maybe ill understand if someone is telling me what hes saying, maybe that will help me understand you understand you whatever language that is that he speaks the british proper english. Proper capitalized over there. In washington today the house will vote on its 2018 budget house and Senate Republicans need to agree on a budget resolution if they intend to pass a tax bill without broad bipartisan support from democrats. The senates budget vote is expected next week for more on the top political stories, Kayla Tausche is here as they work to reach that budget deal in both chambers, they are already adding some money to the deficit, specifically about 29 billion in new funding for Hurricane Relief that was announced by Mick Mulvaney last night in a form request for that additional relief funds for those affected by hurricanes maria, harvey and irma 12. 8 billion for femas Disaster Relief funds, 16 billion in debt cancellation for the National Flood Insurance Program and Top Senate Democrat Chuck Schumer called the funding a good start the Vice President will head to florida today to visit some of those hurricane victims. Next week, we could see the fate of the 2015 iran deal come to a head last night the house said it would hold a hearing next wednesday. The president will make a speech on the iran deal on thursday that comes before an october 15th deadline that comes every 90 days where the white house would have to recertify that iran is complying. President trump has done it twice so far white house Officials Say reluctantly so secretary of state Rex Tillerson yesterday said that he would provide the president several recommendations. Well have a recommendation for the president. Were going to give him a couple of options on how to move forward to advance the important policy towards iran. That Rare Press Conference by secretary tillerson was part of an administrationwide effort yesterday to push back on an nbc news report that tillerson was quite frustrated with the president this summer and insulted him directly in front of other white house officials yesterday bob corker who is looking at retirement next year, spoke candidly about some of that frustration he witnessed. Ithink hes in a trying situation. Trying to solve many of the worlds problems a lot of times without the support and help i would like to see him have tillerson said he serves as long as the president feels hes appropriate, and the president says he has total confidence in secretary tillerson. Certainly a tense situation between trump and tillerson with several Foreign Policy irons in the fire kayla, thank you. Well see how this plays out the back and forth the nbc report was that he was ready to resign last summer, and that hes not, hes sticking around well see what happens he said he never considered it you can imagine a guy running a company like exxon for thats exxon. Youre the ceo, people you walk in the room, people turn pale hes here. Then all of a sudden, you know youre in a hierarchy i dont know. They were strident yesterday on both sides trump, this was not a well see where he said well see what happens with tillerson this is i have cohave total con in rex it was a coordinated effort, im sure, to have him come out with that press conference if he had left in the summer, that was a bad time. A key cabinet member so early in the administration. Speaking of key people, i feel bad because i said caffrey is on the show, i didnt mention matthew. For that was an error of omission im sorry, youre here were glad to have you lets talk markets and the economy as we continue our countdown to the jub jobs numbe. Big money to move where he moved. If you do the same thing, put in your time, senior economist at deutsche bank, same thing could happen down the road, right . You think . Potentially well see now we want to know about this jobs number tomorrow. How much are the hurricanes going affect it . Will the markets look past that . Its a oneoff yeah. Definitely we think theres a big Hurricane Impact on the employment report. What do you think it will be were at 50,000 for obs even though you know why, that brint will go, whoa immediately you write it off . The ism data earlier this week, the employment sub components there were strong we are coming off of three months of 185,000 jobs the market will look through the weak report, the fed will look through the weak report. The market would look through a weak report, but if you get a stronger report that could help boost odd foos for a december h. Then were back to good is bad because it means a hike. Dont hurricanes help with inflation . Its been too low, inflation, in the feds eyes regardless of what happens tomorrow, the key question over the coming weeks is what happens with inflation data. Lone inflati loan inflation has been the constraining force for the fed gasoline prices for the cpi print, you expect a strong report there we think inflation will be Strong Enough for the fed to hike in december but that is the key question a lot of uncertainty around that jack, when you come in and see futures up, no volatility in september, 24 for the advanced, do you say, wow, the fed is still easing around the world, this is to be expected or do you say the economies around the world are Getting Better its a twopart story its one of earnings are the longterm Driver Earnings have been improving we kick off Third Quarter earnings next week we think that situation continues to be positive the sectors in the economy should have good earnings. Energy markets reflecting good growth the technology sector, good Earnings Growth expected there in the shorttermer term, its a valuation story. In that regard Central Banks have been helpful. They have been a bridge between trying to get to a better tomorrow and that better tomorrow arriving in earnings. So starting to happen starting to happen for eight years. Easy money to the actual economy. Yeah. Plus as long as we stay low, even Warren Buffett says valuations can have a higher level because theres no alternative. Lower rates mean higher multiples. Lower rates are a lore hurwe hurdle rate, and you have spendinging into earnings for the future you have have higher earnings, you do 20 times earnings on the higher eps, you get higher numbers on the s p. 2600 on the s p is the next stop thats possible. Certainly possible. Jack, are you going to if you could buy calls on dow 1 million, do you think well see do you think he can can live to see those . I certainly hope to live that can. Buffett said a million. He said a million in a hundred years. We need singularity yeah. You have to get long healthcare right get long cyborgs. We need hardware we have the software i think you need an interface from the hardware to the software as a backup, im still praying. Good idea keep both options open. No reason to cut off your avenues. Thanks, guys. When we come back, does Mark Zuckerberg know what facebook is thats the question posed by the cover story of new York Magazine the author of the article will join us next squawk box will be right back. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. But we should be seeing ymore range of motion. , im fine. Okay, well lets see you get up from the couch. Im sorry, what . Grandpa come. At cognizant, were uniting doctors, insurers and patients on a collaborative care platform, making it easier to do whats best for everyones health, every step of the way. You may need more physical therapy. Ugh. Am i covered for that . Yep. Look. Grandpa catch grandpa duck woah ha there you go grandpa. Keep doing that. Get ready, because were helping leading companies see it and see it throughwith digital. Welcome back to squawk box. Mark zuckerberg and Cheryl Sandberg are unlikely to testify in front of Congress Next month. The social media giant is expected to face a grilling on how russiabased groups used ads to influence the u. S. Election for more on facebook, lets bring in max reid, Senior Editor of new York Magazine, and the author of the cover story, does even Mark Zuckerberg know what facebook is . Thanks for being here. What is your point its so big to get the arms around nobody knows . Were talking about a service with 2 billion active monthly users. It will pass christians before the end of the year. By the end of next year, onethird of people on the planet will be using facebook. Outside of china, one minute out of every five minutes is spent on facebook. Thats something we dont have the ability to process we dont have models for thinking about how Something Like that works or what kind of political or social power it has. Sometimes it seems like even Mark Zuckerberg who is at the top of this ever expanding network doesnt quite know what will happen. We know facebook and other Technology Companies have been seen as saviors who are doing all kinds of good work, trying to make sure that people are connected. There is reason for thinking a lot of great things will come out of this more eventually some potential down side has been focused on probably where washington is thinking, too. Yeah. Absolutely i use facebook i love facebook. Ive been on it for a decade plus it is an amazing invention in terms of its ability to keep people connected, when you have that many people all on one website, getting news from it, sharing news on t talking to one another, its very easy to manipulate it. Facebook doesnt have the protections in place and certainly government has not regulated it in a way that ensures that accuracy, that responsibility is at the focus its scary. I have never been on it. What youre describing it like if you were, you know, if Mark Zuckerberg was an evil person its orwelian in that there would be no dissent. The Business Model is to monitor you, gather data and create advertising to target you. I think zuckerbergs heart is in the right place, but this thing has gotten so big, not even a saint could really make it work for us you followed him around yeah. Ive been talking to people he has spoken with. Hes doing a tour. Hes challenged himself to have visited every state in the United States by the end of the year a lot of people talked about this as a president ial run, or a run up to a president ial run in talking to people hes spoken with, i feel confident hes not planning on running for president. What is the tour about . I think its r d. He wants to meat with peopmeet facebook people and find out how they can be placed more at the heart of their own community and Group Gathering and social you benefitted from that, having all those different homes, right living everywhere. Yeah. Definitely does benefit. It changes your perspective. You have a much broader perspective. We both know provincial people who have only been to new york its very telling. Yes you do need to get out and make sure you meet with people from all walks of life. The flower states stop in its admirable. Probably more big ceos could stand to do this, meet with people right hes been pointing out this is a mission to understand how people live. He meets with religious leaders, with civic leaders, talks to people working he talks about how facebook can better form communities around the country. All admirable, all of these goals, but theres been a tide thats turned. We know this congressional hearing is coming up, which is likely going to be a grilling. Do you expect the end result for the government to get more involved or can they skate past it its hard to tell it depends on how much more stuff comes out. I think theres hints that there will be more revelation theres a we have not heard about yet beyond the 3,000 ads purchased by russian affiliated agencies and users. There is a significant body of regulatory law that governs how broadcasters can publish political ads. Seems easy to apply that in one way or another to Online Platforms. The internet. Just catching up the laws to the Way Technology has moved it seems facebook has been much more serious about this than other Companies Like twitter mark warner said he was di disapointsed with the report that twitter came up because they piggybacked off of what facebook did facebook is so much more bigger than twitter, twitter has one thing going for it, the president reads it and tweets. If you go on, you can tell its chock full of bots and idiots. Thank you for being with us today. Thank you for having me. Coming up, well talk taxes, the budget and cybersecurity with chris coons he joins us next and later, Marcus Lemonis will join us live from puerto rico where he spoke with the islands governor about the recovery and bond crisis. Tmobile never stops. Weve doubled our lte coverage. Were already the fastest 4g lte network, and we just keep getting faster. And now americas best unlimited gets even more powerful when you pair it with the new iphone everyone is excited about. Introducing the amazing iphone 8. Its the best iphone yet, now on americas best unlimited network. For a limited time, save up to three hundred dollars on iphone 8. And now, join tmobiles Iphone Upgrade Program for free. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning u. S. Equity futures at this hour are modestly in the green. The s p is indicated up 1. 5. The dow jones indicated up 10. The nasdaq 666 i just mentioned you said damian one of our viewers said did you have to . No, a different damian, not you. Its a fictional character. If youre looking for pure evil the guy is probably sick of hearing it yeah. Apologize. The house is preparing to vote today on the 2018 budget while the senate is hoping to put its version to a vote next week both paving the way for tax reform joining us is delaware senator chris coons. Lets talk about the tax reform or tax cut bill or how ever people want to refer to this we dont know the details. We know some the countdown is on to get this done before the end of the year. What have you heard . What are your thoughts on this so far we dont have a bill we have a broad gauzy outline. There are some concerns already being expressed in the senate by republicans and democrats that the amount it would raise the deficit and potentially add to the debt is too large. The details are not yet clear. The process that has gotten us thus far was too much of a secret behind closed doors one party only deal. There are democrats like me who would like to work across the aisle to find ways to reduce the tax rate and broaden the base and to find a way to do that that increases tax relief for the middle class thats what president has said is his goal. Were only going to get there if we have a bipartisan and open process. Lets be clear, at this point youre not in the game what matters is if the republicans can solidify their own base and come up with the votes to come through with this. You mentioned in the senate there are some republicans who have concerns. What do you think the odds are that those concerns can be met and that the republicans can do this on their own . The outline weve seen so far includes cutting 4 470 billion from medicare in the ten years ahead. It included eliminating the deduction for state and local property taxes both of those will prove to be unpopular. Senator bob corker, senator rand paul, both who have a willingness to buck their caucus for matters of principle already said theyre likely opposed to it so Majority Leader Mitch Mcconnell will have difficulty rounding up 50 votes if very two expressed real concerns. This is the same thing that happened with the healthcare reform package, something done one party, without hearings, without an open process and ultimately failed. They only have a few months to get this done. Actually a few weeks of legislative time so my hope is theyll get the details clarified soon and start working in an open and bipartisan process they probably have a much better shot of getting this passed than healthcare healthcare is a much bigger morass, and tax cuts are in line with what the republicans can cole coalesce around. The core question is whether these have to be paid for in some way and whether the pay for is simply going to be aspirational economics, believing theres going to be more than 3 growth as a result of tax cuts, or having to identify an offset and pay for. My guess at this point its going to be dynamic scoring, and what they think growth will come as a result of cutting taxes thats right. Senator corker has expressed real concern about whether there will be anything like the growth required to cover a multi trillion dollar tax cut. He has a reasonable concern. I think its a toss up now whether this gets passed with republicans alone. Lets say they dont what issues would make you come to the table and say i will negotiate and try to come to an agreement . President trump has said that what he wants is a tax cut that primarily benefits americas middle class theres things that we can and should do that i think would make American Companies more competitive internationally, that would make them more likely to invest in infrastructure and Capital Expenditures and expand tax breaks that benefit middle class families some of those are in the broad brush document, some of those issues are not addressed in a plan that right now is skewed heavily towards the wealthiest so youre bothered by things like the estate tax . Yes i look at that up front and suggests this will overly benefit the wealthy given what the president said his objective is we also dont have a jct score because we dont have a bill and there are not details. We did hear theres a chance that a fourth income bracket would be added, that would sh ma be maintaining the highest tax bracket we have. Yesterday we talked to chairman brady, he said none of this has been decided, if Something Like that were to develop where you maintained that highest income tax level for the wealthiest americans, would that satisfy some of your concerns . That might satisfy others in my caucus. Im principally concerned about not having baked into this a massive cut to medicare, not paying for tax cuts by taking away access to Healthcare Benefits for millions of americans. And id like to see us do more for Capital Investment by making permanent provisions of the code that help to accelerate growth senator, thank you for your time sounds like it will be a while before we figure out if youll be playing on the field at all thats right. Senator, thank you. Thank you coming up, the front lines on the war against cancer. Well talk to a pioneer of immunotherapy, a treatment that harnesses the bodys natural defense to fight disease. And later, congressman luke messer will join us. U watching squawk box on cnbc im living that yacht life, life, life top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany, gany, gany, gany, gany watch this dont get mad bell mnemonic get e trade and get invested there was no magic up hisgends. Sleeve. He didnt have wings, or a cape. He was but just a man. With the will to go beyond. Welcome back, right now its time for the executive edge. The Trump Administration will keep for now an obama era rule that halted Corporate Tax inversion deals. Tax inversions occur when a u. S. Company is acquired by a smaller business in a foreign country and adopts the domicile to reduce the u. S. Tax burden the Treasury Department says that it planned to keep those rules that helped halt the practice with the expectation that tax reform would eliminate the needs for rules like this. Secret lives of the super rich host robert frank joins us now with champagne kisses and caviar that was that other one. We will wake you up this is more than starbucks this is a brooklyn coffee shop, the Extraction Lab they serve the 227 coffee t goes for 18 bucks a cup why its made with panamanian geesha beans we brew it ourself they have a 14,000 machine in brooklyn that makes it this coffee, this panamanian geesha sells for over 500 a pound. Why won a world brewing championship in europe why well taste it. I never drink black coffee. I dont either. I had a sip, and this is its floral, its a little fruity it smells good. I dont know. Its so smooth. Just take a tiny sip. I swear, i had some p panamanian geesha out in colorado when i was in school, but we smoked it. Was the wake and bake panamanian geesha, it just sounds i cant drink coffee without milk, but i can this its not bitter its smooth. Joe how waard schultz put one ovr on all of us by charging 6 bucks. 18 thats a lot. Also on tonights show, a taco you like tacos. Yesterday was National Taco day. 25,000 taco. What . We were going to bring t but they make it in los cabos, but by the time it gets here, the cheese, the truffles cacaviar you tried it . No. The crew went out there. Was it worth it no. Never worth it. Is there sour cream hot sauce . Or its just called a taco because its in a taco its called a taco. It is some special cheese, truffles, calf area, viar tcavin it you pair it with a special tequila, its a 50,000 tequila and taco combination the things you find are for buffett. Not buffett no. Hes as tiblgt ght as the guys who used to light their cigars with 100 bills this is good coffee. I wouldnt pay 18, but its good i would pay for a taco bell taco not 25,000, but ill bring you some really . Yeah. Love those. I did eat the 2,000 pizza. What was on that truffles got to have truffles gold flakes itsingredients why gold makes . The pizza was not gold flakes it was gold strips so ridiculous that pizza was good it wasnt 2,000 good, but very good i was out on long island for a family event, we were at a hotel out there, they were watching your stuff at the bar loving every minute of it but also saying you have to be kidding me its ridiculous its fun aspirational and you can look at it and say these people are idiots. Exactly right good morning. Thanks for our panamanian geesha maybe it wasnt. Secret lives of the super rich is all new tonight at 10 00 p. M. Eastern. That is pretty good when we come back, harnessing the bodys immune system to fight disease. Well talk to a pioneer in the field after the break. And a quick check of whats happening in the european markets. France is flat germany down a bit ftse is up a bit squa squawk will be right back. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. This is not a cloud. This is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for business. Yours. Welcome back peter thiel and sean parker are reportedly financing a secretive cancer fighting startup. A source says the Company Called 3t bio science raised more than 12 million in a massive seed round. The firm is working on ways to use the bodys own immune system to fight off company the company is led by a company biology ph. D. Student. Were joined bay pioneer of immunotherapy research, max krummel is director of pathology. Today he hopes to make some day make us allergic to certain types of cancer. What was the mmunotherapy a monoclonal antibody, a marker on t cells. As you deal with immunotherapy, i think about the immune system, and that is what makes it so complex. Stuff tis t we have heard of the advances of mono clonals which were b cells then you have cytokines and all this other stuff is part of the immune system and it works together, right . But the key about mono clonals is theyre drugs that are binding the surface of cells and interrupting the conversations immune cells are having with each other while they decide what to do. So how well is the function of tcells understood in mediating well, we all understand how they work but we dont agree. What does that mean that means that we have ideas about how things work and were all rectifying those ideas and figuring out which ones are working. So in certain tumors things are going awry in one ways and we can treat those with immunotherapies weve made but theres a different theme to how the system goes awry. You point out there are ten times as many bacterial cells in the body so the immune system learns its not self but not something they need to attack. Correct. Somehow cancer a lot of times when youre young if theres a cancer cell that arises from the mutation, the immune system will recognize that as you get older, does the immune system age and become less effective at rising a cancer cell . It ages theres also aspects that cancer over time evolves to figure out the traps. So that itlooks like sell its less that it changes the surface than it changes the gene expression that it has so it can look like something you want to tolerate. It keeps coming back again and again and every time it shuts down thats right. And as long as it remains occult, then it figures that out. As we age it figures it out. As you point out, so much disease is either the immune system doesnt recognize cancer or it recognizing Something Like diabetes or alzheimers disease where its attacking itself. What goes wrong with the immune system in autoimmune diseases . Why does it suddenly not understand that its doing harm rather than good i think at some point there are patterns in nature that are recognized inappropriately so in autoimmunity your pancreas, for example, in diabetes, becomes something that looks like it should be destroyed. Maybe theres ideas that maybe thats viral, you might have a virus that shows up in your pancreas and for a little while that turns on the cues that says this is an infected cell, attack it but thats a big question and we know that, for example, in families you can have genetic predisposition to autoimmune so theres some genetics but theres also some environment. We dont know these. You think you can retrain the immune system . Yes we are thats what the current immunotherapies are doing for cancer and i think well be able to do that in the studies of autoimmunities but we have to understand these patterns. We have to understand all the different ways in which the immune system can basically function to either tolerate things or get rid of them. And what you want to do is figure out how its not working in cancer and apply that mechanism to autoimmunity to turn it off, because cancer is where the immune system is off and vice versa, you want to find the systems where its going well, figure out where that pattern is about and apply it back to cancer, for example. I made the point you have tcells, bcells, all these other substances that are generated by both of those, whenever you do something over here specifically trying to help here dont you worry that yes. Such a complex system with so many moving parts that suddenly the side effect is that it attacks Something Else and you die from the stupid immunotherapy . We call that Collateral Damage and its like when you see chemotherapy, the side effects are liver toxicity because the drugs there are very toxic to other sites in your body if youre tweaking the immune system, you have to danger of throwing the immune system into hyperactivity and you see that so some portion of the people get cancer will end up with diabetes very small portion thats treatable and i think you and i would take the point of like you get to live and you might have to take insulin. Thats a good tradeoff. You remember you were probably young but do you remember the battle against sepsis and the Biotech Companies that were going to be able to do this there was sinnynergen, have we figured out how to save someone who has septicemia hugh hefner just died, i heard that was sepsis again and we figured out how to cure that no. Why thats my point. With the cytokines and the cascade of these immune we still dont even know how to do that. Sepsis is a particularly weird one because its this massive collapse suddenly your body goes nuts, every immune cell starts making tons of cytokines, you die from shock. Septic shock. People know that term. So weve been working on it for 25 years bio tech littered with bankrupt companies that havent been able to figure that out. Immunotherapy is different. Sepsis, ill agree with you, thats it doesnt seem that complicated. Its just your blood has infection, kill the infectious agent without killing sepsis is a side effect of evolutionment at some point its where everything is trying to do the right thing but everybody is trying to do the right thing at the same time everybody. And it blows up. Do you have a Public Company that you think is exciting that or a couple of them that are really close that will be commercially successful. I like the small ones. I like the small prepublic ones theyre doing things that immunotherapy where the tbone everyone is trying to do copy cats but weve started a small have you started a company yet . Its called pioneer theyre tboning cancer from other angles theres so much going on that all the things we did to release the breaks on celltcells, but they hit other barriers you want to push them out of the way. Youve had amazing success with cases that looked like nobody else could help along the way. Max, thank you. See you next time. Real pleasure. Maybe everything will be cured by tomorrow, perhaps. Were working on it. When we come back, puerto rico is still struggling to recover from Hurricane Maria we will get a live report from marcos sl marcos in san juan next. Because, when you really, really want to be there, but you cant. At cognizant, were helping todays leading Media Companies create more immersive ways to experience entertainment with new Digital Systems and technologies. Get ready, because were helping leading companies see it and see it throughwith digital. Ronoh really . Gs going on at schwab. Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. This s electricity. This is a power plant. This is tim barckholtz. Thats me this is something he is researching at exxonmobil using fuel cells to capture Carbon Emissions at power plants. This is the potential. Reducing co2 emissions by up to 90 . While also producing more power. This could be big. Energy lives here. The s p 500 on its longest winning streak since may watching very closely for more clues on whether the fed may move on rates again. Well break down the markets move and talk investment ideas straight ahead the house ready for a budget vote today well talk politics and the economy with Republican Policy Committee chair luke messer. And move over electric cars, its time for electric planes. A look at a startup grabbing the attention of boeing, jetblue and other venture capitalists. May be a ways off. Anyway, the second hour of squawk box begins right now. Announcer live from the beating heart of business, new york city, this is squawk box. Good morning, everybody, welcome back to squawk box on cnbc we are live from the Nasdaq Market site in times square. Im becky quick along with joe kernan, andrew is off today. Weve been watching the futures and after more gains that weve been watching with all of the major indices closing at new highs once again yesterday, youre going to see the futures have been indicated slightly higher this morning. Dow futures indicating up by under 10 points, s p by under two points and the nasdaq indicated up oh, my gosh, right back at 666 again. Up by 6. 66 points. Heres whats making headlines. Sonic has confirmed a data breach that was reported last week by a Cyber Security blog. Sonic says that a malware attack may have allowed hackers to access some customers credit card information sonic didnt say how many stores or customers were potentially affected Health Insurer cigna is going to be ending coverage for the opioid painkiller oxycontin as of january 1 at that time, its going to be covering a differently formulated opioid treatment that is less vulnerable to abuse by users. That new treatment is made by a Company Called collegium pharmaceutical and the white house is asking for 29 billion for texas, florida and puerto rico. Mick mulvaney is asking federal agencies to estimate how much additional money they will need for longterm Disaster Recovery efforts. He wants that information by october 25 puerto rico trying to recover from Hurricane Maria, basic aid is arriving but much more needs to be done. Pile on the territorys massive debt and you have a big recipe for a possible market disaster joining us right now from san juan is Marcus Lemonis, the ceo of camping world and host of the cnbc series the prophet. He spoke to professors governor about the situation after being there, marcus, and seeing this damage firsthand what do you think the Biggest Challenges are right now for the islands recovery . You never want to oversimplify a very complicated problem, but there are three problems that exist here on the Island Number one, theres a logistical problem to get supplies and materials to the outskishts of the island where it was hardest hit. And number two there seems to be an exodus. When you think about the tax base here, 46 of the population is below the poverty line so 54 are actually generating the tax revenue. Youre seeing an exodus of Young Professionals and executives that are leaving the island headed to the mainland the third problem and youll hear about it in my interview with the governor is how theyll handle the bonds take a listen to yesterday my discussion with the governor the level of devastation you were able to witness some of it, its enormous. We need an aid package so we can get a baseline, we can get a path forward towards rebuilding and have a conversation with, of course, the stakeholders in puerto rico. That was the more formal discussion in the casual discussions the governor realizes that theres a problem here he initially attempted to negotiate with the bond holders through title six, its now in title three where there is a judge and a panel of people that are involved in this but the real question is if you bring these bond holders to the table what is the collateral, what are the repercussions . Most of us have seen the bonds are trading at an all time low so thats a huge challenge. Marcus, the bonds yesterday, think fell to 30 credibilients r trading above 50 cents before maria hit. That was 25 drop we saw witnessed just yesterday after President Trump came in and said forget about it, were going to have to forgive a lot of this. Made a lot of people wonder whats happening with that whats your take on all of this as somebody who understands markets, somebody who understands business if you wipe out general obligation funds, what will that mean for the short term and the long term for puerto rico . Theres no question that the area needs debt relief they dont have the current cash flow to service what exists today so redoing those bonds makes sense but i wonder about the marketability of bonds or any Investment Vehicle going forward. The biggest thing i think no one is talking about is if there truly is an exodus out of this island and you couple that with what could be a terrible vacation season, the cash flow and cash base here is knenknee mick to get around the island, the roads are gone, the bridges are gone but when you come to san juan, its almost like youre in a different place. Were in a Convention Center, the hotel across the street has plenty of power but as you drive four or five miles outside, its devastated, where is that money going to come from how will the bonds get serviced and most importantly how does the governor and other people here keep the residents from fleeing and going to orlando, miami, new york. Thats what i worry about. A great question when you consider how long its expected to take to get power back up and running. Get water back up and running. Were talking months whats the latest estimate you heard . Becky, whats odd object this is when you fly over the port youll see container upon container of supplies. Theres no shortage of water and supplies the challenge is getting them from the port to the outskirts of the island. I saw somebody last night that runs logistics for world vision and they were telling us this is unlike anything theyve ever seen its not a power struggle, its a communication problem. As you leave three or four miles outside of san juan, your ability communicate doesnt work, the cell phones dont work and theres nobody organizing it all. You would expect fema to do that, we here in the Convention Center where the Disaster Recovery is and theres no collaborative effort particularly organizations like world vision that have a history and knowledge of doing this, theyre not being brought into the tent. Marcus, it sounds like a huge issue that will take a long time to get this sorted out thank you very much for joining us today. You got it. Again, Marcus Lemonis. In the meantime, stocks are trading at alltime highs. Joining us to talk about the markets and preview tomorrows jobs numbers are randy gwartzman who is coportfolio manager of the Baron Discovery Fund and James Sweeney from Credit Suisse gentlemen, welcome to both of you. Thank you. Randy, we havent seen you sit down with us and go through this stuff before. Tell us about the Baron Discovery Fund what areas do you focus on were a small cap growth manager and we focus on competitively advantaged growth companies, mostly u. S. Focused so we focus half the portfolio on technology and health kcare and the other areas are industrial, consumer, small amount of energy. With the markets continuing to hit new highs being up 24 since the election, is it harder and harder to find things you think are a good deal . When we look at our portfolio, we look stock by stock and thats how we do it at baron, we do it on a micro basis. We try to be contrarian so we look for things that may be what we call fallen angel a company that sells off 30 on an earnings record but weve done fundamental Research Behind that and say wait a second, by our estimates this is only trading at four times cash flow so when we buy a company like that and were confident weve done our work we can get a good return and the stock is up almost 100 this year. So what the broader averages are doing doesnt impact you at all . We try to avoid looking at the market perisa se. Its not like an Alfred Hitchcock movie where the birds are attacking. We look stock by stock. Would you agree with the assessment that we heard from Warren Buffett that as long as Interest Rates remain low none of these valuations look all that crazy. Look, the rate environment, the gdp environment and the inflation environment are real key background variables so when were right now low inflation and a nice steady gdp growth environment with less regulation in the background and the potential for tax reform its a nice environment its a good growth environment for stocks like ours. So, james, with that in mind, what happens with the fed is incredibly important and the decisions will be based on things like the numbers we get tomorrow what are you expecting with the jobs report . Were expecting a low number. So weve got 30,000 for payrolls why because of the storm because of the storm. Thats where were going to see it. Yeah, we think the wage number will be okay and we think a month later you get the detail by states and find out basically its florida so its a fake weak number tomorrow. Does this put the fed on hold until they can see numbers catch up not at all. I think by the december meeting when we think theyre likely to hike, theyre going to basically have this information and know it was just the storm. Theres other data that will be affected by the storm in the weeks ahead as well. Theres so much happening behind the scenes. We know Janet Yellens term is up at the end of january so you have them raising rates, you think, in december for the first time and they may have a new chairman a month later. Thats true so we may need to rethink everything but i think yellen has been careful of staying out of the politics and signaling a path for the Balance Sheet which is not especially controversy. A new fed chairman could continue with her Balance Sheet plan and there is some discretion depending on how many longterm bonds they continue to buy. There will be some they buy. There are these caps so there will be some discretion for the new chair but its possible it could be very smooth. Greg laid it out very well in the wall street journal, he said its a binary choice. You hear these different names but the president has a choice, that is to put somebody in who is going to be janet yellen or continue her policies, like a j. Powell or a completely different solution, someone like a kevin warsh, someone like a john taylor whos been highly critical of what the current fed has done game that out. The odds that what would that mean for economic policy. I think from a market perspective its not so much whether the person philosoph philosophically is different from yellen but whether the person is willing to disrupt immediately. Because it could be that the margin on what you get next year if the economy stays the basically two hikes or three and it might be these people who are seen as hawkish will give you one more hike and there will be a little bit different on the Balance Sheet. Where the major questions will be will be down the road if its two, three years out. 2018, 2019 . 19, the economy is still strong, maybe youre heading into an election year, do you have somebody that will step on and hike four times at that time i think thats what markets will worry about and that gets to the heart of whether you have someone who credibly fights inflation and keeps inflation low and volatile as it has been for 25 years. Randy, i know you guys are more bottoms up versus top down but you might be spending time thinking about this. We want to make sure were not doing something silly in terms of where our exposures are. A lot of people say that the tech sector is overvalued. What we do is look and say theres some megatrends in technology that are aside from inflation and what the fed is doing, driving unbelievable things so Semiconductor Capital spending was 44 billion in gift 54 billion in 16 and people are thinking it will go to 70 and beyond in the 2018 2019 period thats driving huge growth 234 some of the companies that we own because were suppliers to the big guys so we own a Company Called i corps which provides chemical and gas delivery equipment for major semiequipment manufacturing companies. That company can grow could double its size over the next three to four years and thats the kind of company were looking for. Were looking at these big meg trends and semi is being driven not just by iphones, its being driven by Artificial Intelligence and the standing up of the Chinese Semiconductor industry which is a very interesting background story china has been trying to buy a lot of companies in the u. S. And theyre being prevented for security reasons so what theyre doing is starting to stand up and entire new industry and i think it will be a few years of very big spending over there as well to add to the growth of the industry. Randy, james, i want to thank you both for coming in today. Thank you very much are we doing this now . You want to all right President Trump tweeting i dont know, he somehow notice, maybe hes watching squawk box stock market hitting an all time high. Its been a series of awl time highs again and again and again. Unemployment lowest in 16 years, business and manufacturing enthusiasm at the highest level in decades. In a subsequent tweet i would point out, if i were him, i dont want to speak for the president , but 24 since the election up 24 since the election, the dow, were not supposed to be able to have returns like that some people should be happy. I know theres a lot of trump derangement syndrome out there but put that aside for a second and think about 24 , the entire stock market, and what that means in terms of Wealth Creation and Everything Else so theres a reason to be a little bit happy, better than down 24 . That is true. Can i say that . Tick up 24 . Unless youre someone that likes to watch the world burn like from batman. Not me. Some people some men do just like the watch the world burn. Do like or dislike . They do like to watch the world yes not here no. Folks, when we come back, for many young home buyers, the hardest part of buying a home is the down payment millennials are turning to crowd funding to try and help them in a pinch. We have that story after the break. Later, the chairman of the Republican Policy Committee, congressman luke messer, will join us to talk about tax reform, equifax, and much more stay tuned you are watching squawk box right here on cnbc opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Young home buyers say the hardest part of buying a home is saving for the down payment. Thats always been the case but millennials are turning to a new place crowd funding thats right, crowd funding to help them get into homeownership. Diana olick has that story. Why not, becky, they do it with anything else until now, lenders wouldnt let you. Down payment assistance was limited to family members, Community Nonprofits or your church and all of that with significant documentation. This is different this allows you to tell your story, it allows for folks to buy into the story of what it is you have, your loan story, your home story one of the things, our tag line is fund your way home. Enter cmg financial, a Mortgage Lender which is launching home fund me, an Online Platform that gives home buyers a way to market their needs and receive multiple small tax free cash gifts from anyone to finance the down payment on a home and this Pilot Program has the blessing of fannie mae and freddie mac which finance the vast majority of mortgages today. What were doing is trying to test and learn a variety of solutions because the preferences for todays home buyers have changed significantly and theres no Silver Bullet to solving a problem as hard as how do you find a down payment. So the idea, of course, is to link this to wedding and baby registries and add to the savings that you already have which could help you avoid higher rates and mortgage insurance. Not a bad idea what do you think, guys . I dont know. I go back and forth. I get it if youre linking it to a wedding registry i understand that the idea that says in lieu of a gift give me a money that i can put towards a down payment of a house. But sometimes is it coming and saying i dont have money for this so can you give me some . Yeah, and again, its are people going to give it to you and my concern was do you have skin in the game remember during the foreclosure crisis and the no down payment loans the argument was well, people walked away when the home prices fell or went underwater because they had no skin in the game is this the same thing you could argue either way. I get it if its in lieu of a gift that makes sense to me if its im standing on the Street Corner with a coffee saying hey, i have something i cant afford that i want, give me the money i guess those are the variations and degrees of separation on this whole thing, right . I think its more like gifts. If you look at it, the average wedding gift somebody told me this recently is about 200 plus if youre going to the wedding, youre buying the dress, buying the tux, 500, 600 if you dont go, give them 500 and if enough people do that, 3,000, you could put a good down payment down. And that makes sense rather than buying a new set of china or silverware or right, who needs the 16 piece. Right, a couch you that you dont have the house to put in the, changing the traditional gifts and saying give me something that would help me out along the way. That i understand. Its being more practical. That makes more sense to me i need to hear more but i understand your concern about look the rules are so strict you cant be giving this money to somebody but if its being substituted for a gift i guess it is yours im kind of talking myself in circles. They want to make sure youre not borrowing the down payment because thats adding to your debt these are designed to be smaller gifts added to one big down payment. I get it. Its interesting new wave of the future thanks, diana. The Nobel Peace Prize comes out tomorrow whos going to win that . Literature this morning, kozuoro ishiguro, he wrote remains of the day. He won it says novels of great emotional force, mr. Ishiguro uncovered the abyss with our illusory sense of the world. Last year bob dylan. Hes a uk gentleman that moved to the uk when he was a kid. Born in japan. But its a really am i not an ugly american . The movies great. You know the knew v. Is unbelievable. Really. I jumped right in with you. Remember last year bob dylan didnt show up wouldnt even comment. Do people still read books . Maybe ill listen to the book. People do that now, right . Anyway congrats. A look at googles new product line a programming note, Philadelphia Fed president Patrick Harker, eight nominations for academy awards. For Patrick Harker . Well join steve leashman to discuss fed policy, rate hike timing and the first cnbc interview on squawk box. Well be right back. Are you ok . What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac you myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Im living that yacht life, life, life top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany, gany, gany, gany, gany watch this dont get mad bell mnemonic get e trade and get invested this s electricity. This is a power plant. This is tim barckholtz. Thats me this is something he is researching at exxonmobil using fuel cells to capture Carbon Emissions at power plants. This is the potential. Reducing co2 emissions by up to 90 . While also producing more power. This could be big. Energy lives here. Google announcing a new lineup of new products the company doubling down on its commitment to the hardware business as it competes with devices coming from amazon and apple. Some highlights include a Google Home Mini and a google home max. So the little one and the big one. Speakers range from 50 to 400. A highend pixel book laptop is on the rundown it runs the chrome operating software plus there are two new phones, the pixel is priced at 600 and the pixel 2xl which costs 850 the most innovative product is probably the head phones that can translate between 40 different languages in realtime. This is one of the only products i would like to try out of the new things out there shares of googles parent alphabet, youre going to see up 99 cents yesterday butthe 967. 77. When we come back, congressman luke messer will be talking about equifax, the data breach there, tax reform and much more. Then alibaba and the pac 12 bringing American Sports to china. Well speak to pac 12 commissioner larry scott about the initiative and the appetite for u. S. College sports in china. Right now, though, as we head to a break, look at the u. S. Equity futures, weve been higher today. Slightly higher but this is coming after another day of record levels. Dow futures up by 10 points, nasdaq up by 10 potsthin, e s p futures up fair value by two points your muscles look good, but we should be seeing more range of motion. Im fine. Okay, well lets see you get up from the couch. Im sorry, what . Grandpa come. At cognizant, were uniting doctors, insurers and patients on a collaborative care platform, making it easier to do whats best for everyones health, every step of the way. You may need more physical therapy. Ugh. Am i covered for that . Yep. Look. 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Good morning, everybody, welcome back to squawk box on cnbc we are live from the Nasdaq Market site in times square. Among the stories front and center, we are an hours time from the labor departments weekly report on initial jobless claims economists are expecting 270,000 new claims for the week that ended last saturday, thats slightly lower than the prior week that comes ahead of tomorrows september employment report. Apple has rolled out an update for its apple watch the series three version of the apple watch is first to feature its own chip for Cellular Service but a lot of users had been experiencing connection problems viz media chief is leaving the company in february. The company says her responsibilities will be split among existing executives. She had been considered a possible successor to ceo Lowell Mcadam but the wall street journal reports it had become clear to walden she was unlikely to get that top job. Russian president Vladimir Putin and saudi Arabias King Salman are meeting at the kremlin today. The two are expected to discuss the Global Oil Market among oh things this is the First Official visit of a saudi monarch to russia and im not qualifying that since. First ever. Apparently. Amazing. Opec and russia getting closer together. There were comments saying that, yeah, this gives additional heft to everybody whos not the United States and the Global Oil Market. Nice room. It is if you like gold. Equifaxs former chairman and ceo Richard Smith heads back to the hill for a third day of testimony. Smith is set to appear before the House Financial Services committee in just under two hours. For a preview of that discussion lets bring in congressman luke messer, a republican from indiana, and a member of the Financial Services committee messer is the gop policy chair and congressman, thank you for joining us today. Glad to be here. What have we not heard from mr. Smith lately that you would like to hear equifax has a lot to answer for. Of course 140 million americans have had their personal information compromised in my own state of indiana its almost 4 million and i dont know if either of you have gone on this web site to check out whether or not youve been compromised. We have both joe and i are in the position that we have. I think just about every adult american is. Ive done it. Its a problem you have to give your Social Security number or at least parts of your Social Security five times, your birth date multiple times, attach it to your personal email i just think for the average american they want to know is this really the way to best protect my information to give you the people that lost my information more information and who will be liable for all this . After all, most American Consumers didnt pick equifax, they just were involved in some other loan transaction and the company they were dealing be picked it. We need to get to the bottom of what will happen most importantly we need to get to the bottom of how we prevent this happening in the future. I think this is much more concerning than any other data breach weve seen because you dont get to pick the company youre doing business with or collecting so much information on you its basically every adult in the United States who has any Credit Rating whos ever tried to make any major purchase and it seems to me that the company has fallen short not only in the response on how they handle this but as you mentioned making sure theyre going to be liable for the damages that come from this. Theyve continued to say theyve put out this package, smith continued to say this over the last couple days we have a package thats out there but they wont say they will be responsible for anything that goes wrong with this. The question is what is the government in a position to do if anything . Its going to be a challenge. Look, 140 million americans, almost any company would struggle to meet that liability. I also have questions about now if over half the people that have Social Security numbers are now compromised what does that do with our broader system and the way its been used in commerce moving forward. So i mean again this is one of those dilemmas that doesnt have a whole lot of answers but the American People want to know what is equifax going to do . I went through the whole web page and im still not clear even what i signed up for. Me neither. So its a mess. I guess the biggest problem is that the stuff is changing and evolving so quickly that its going to be hard for regulation and laws to catch up with it. Whats the answer to that . Theres a broader issue, congressman, i think. I know what we have to avoid. What we have to avoid is writing legislation to specific technologies because the pace of technology moves so quickly. I think we have to look at whether Social Security numbers should be allowed to be used in greater commerce the way theyve been allowed to be used in the past you could industrial that Social Security number used for government purposes but now again with over half these numbers compromised, im not i think we have to think very big about what we do moving forward. The other thing that drives me crazy is not just equifax, equifax did this in the beginning, i think theyve changed. That i basically said if you wanted to find out if youd been compromised you had to right away any legal resource youd have to go after them. Stuff like that is crazy and i cant believe the number of contracts that come up any time you try to sign on to any web site or any app that say a very similar thing, that you wont hold us liable for this. That shouldnt stand up in a court of law, should it . Again, im a limited Government Conservative that wants to see government get out of the way but when you have these standard contracts that people are essentially forced to be signed into we need to look at making sure consumers are protected. Right congressman, while youre here, lets talk about tax reform and this budget. First of all, do you think the budget gets passed and will it be in a form that can pass the senate were going to get a budget passed today its important we get one passed because thats the gateway to tax reform as President Trump said, the American People need a pay raise and its long past time we give it to them through reducing the burden of our taxes on the economy and putting more money in every working americans pocketbook but, yeah, i believe the well get a budget passed in the senate as well and well get it reconciled. We dont have any other choice what happened in health care is not okay from my perspective the United States senate is broken, its not okay to make promises on health care for seven years and then shrug and walk away when it got a little hard and on taxes now, this is one of the biggest things we can help grow wages and get this economy going again and we need to get it done. But is it true to think that in order to make this happen, youre a pretty conservative guy, are you going to have to give away more in this budget than youd like to to make sure it passes the senate well, my focus is on progrowth tax reform and what i know is if we want to grow the economy we need to reduce the tax burden on the economy and a great way to reduce the tax burden on every american is to simplify the tax code and double the standard deduction so that they can opt into a flat tax one way or another well figure this out the senate is broken almost every vote comes down to a tie breaking vote. President trump was in indiana putting pressure on joe donnelly, one of the indiana senators that could be that tiebreaking vote. A democrat, by the way, we should point out. Thats right. We have been hearing that there could be a fourth tax bracket put in place to maintain the current tax rate on the highest earners. Would you beco okay with that if theres a tax cut for people coming in in the lower brackets . Our number one priority needs to be middleclass tax relief so im open to proposals that increase the middle tax cut, middleclass tax cut because working hoosiers are who need the benefit the most but i want to make sure we have a tax plan that grows the economy and to do that, job creators, the folks that are investing in the economy, creating jobs that will bring potentially the potential for better wages so i think we need to be careful there. We dont want to have a tax cut that doesnt get the economy growing. Because if we want to pay down the debt and deficit, how weve done that in the past, the only time weve done that in modern history is when weve had 4 growth our number one target in these tax cuts should be whats the path to 4 growth and if our tax cuts lead us to that path, look, youll have better wages, youll have more jobs, youll have more money coming into the federal government coffers and the opportunity to pay down the debt. Very quickly, were out of time, very quickly, on this idea of salt on the state and local taxes, i would guess youre not in favor of getting rid of i would guess youre in favor of getting rid of the deduction that you can take in states with high tax burdens so youre not paying into the federal government if something happens that you need to compromise to either put a limit on some of those things or to give those back in a big way would you be okay if you got a tax bill passed if it has to be done for politics to get republicans in the blue states to sign off . The current process subsidizes high tax states so i think its a good idea to look at it. Again, my numberone goal is growth so what we need is a tax cut that reduces the tax burden on the American Economy so we have better paying jobs in a growing economy. If we do that, the rest of it is negotiable. Congressman messer, thanks for being with us this morning. Thanks. Pretty amazing because, you know, living in state and local taxes living in new jersey working in new york i know its going to be just horrific for us so other people in the rest of the country, crappy politicians in new jersey and new york keep raising taxes because they know they can get away with it. Spending, illinois, usually democrats. I cant understand how it got in in the first place. And they subsidize. It if they dont grandfather it or make a slow way of doing it its going to collapse the economies. They should stick to their guns coming up, pac 12 conference teaming up with alibaba to bring u. S. College sports to china pac 12 conference president larry scott joins us after the break to discuss squawk box. Well be right back. Traders theyre always looking for advantages. The smart ones look to fidelity to find them. We give you research and datavisualization tools to help identify potential opportunities. So, you can do it this way. Or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just 4. 95 per online u. S. Equity trade. Fidelity. Open an account today. News out this morning concerning tech giant alibaba, the Company Expanding its partnership with the pac 12 athletic conference in the u. S. To bring more collegiate sports programming to Mainland China. Joining us now, the commissioner of the pac 12 from buffalo, right . My entire career we were big eight back then. Thats right, 2011 the buffs joininged the pac 12 conference. Oklahoma and nebraska used to beat up on the buffalos back then is there a market . Theres a market, really, in Mainland China for College Football growing College Sports in general. College sports in general. Well, theres a huge interest in u. S. Higher education, particularly pac 12 schools in china. On the west. Weve had 27,000 Chinese Students currently at our schools and china is the fastestgrowing market for applicants to our school so globalization is a huge priority for our universities and sports can be the front porch for the universities, it provides exposure, interest, passion and at the same time incredible experiences for our student athletes when they can play over there. You have a good thing going in the pac 12 but you need to because of the s. E. C i mean, those two together make for a pretty competitive game because not everyone, i dont know about the big 10 anymore. Well, the great thing about the pac 12 is the all around excellence weve won more ncaa championships than any other conference we hit 500 last year the next highest conference is over 300 the rio olympics in 2016, we had 246 student athletes participating in the olympics. And back to gloeblization, that was from 47 Different Countries so its the all around excellence of the conference obviously were strong in football, strong in basketball, those are the sports that get the most notoriety but its an all around commitment. As somebody who has kids who are going to be applying for schools, whats the percentage of International Students in schools today . What was it ten years ago . What will it be ten years from now . Its about 15 of all the undergraduates and its higher for graduates. 15 of all the undergraduates at pac 12 schools are outside the u. S. What was it ten years ago less, i dont know the exact number. Seems like its tougher to get into the schools were competing with students from around the world to get into our schools. Our universities see themselves as competing on a global stage, faculty, research partnerships, undergraduate students the primary mission is to provide access for students. Especially for statefunded schools. Yes, and Global Centers of excellence our public universities have quotas and caps in terms of how many outofstate students, how many International Students but theres a growing interest in these global higher ed brands. So the i sound like someone who starts every sentence with so. Youve got ohio state worth 1. 5 billion. You look at revenues and expenses and put a normal multiple on it whats the pac 12 . What you oversee, those football teams, its multibillions of dollars youre overseaing right now. Thats a lot of money and you can see what happens when theres a lot of money involved. Things happening in basketball in the ncaa right now. Do you have the answer do you sleep at night . What weve read recently is a big concern, our highest priority is protecting the integrity of the competition when you see people cheating and the influence of money and of course its a big concern weve had 7,000 student athletes in the pac 12 only 2 are going on professionally in sports. So the system is providing Incredible Opportunity our universities and this is true in sports, theyre about students becoming successful in life afterward if you look at the fortune 500 ranks you will find so many leaders there say they Learned Leadership skills from college. I agree i talked to our alumni and ceos, they love to hire former athletes, especially women the correlation between how many of them were athletes, the grit, the perseverance, the playing as part of a team, leadership, these are things you get from sport one more thing. Im sorry to cut that off. I wanted to hear about that but, i dont know, weve got to run i read somewhere if the informal doesnt ha if the informal doesnt handle this from here on out, i dont know how they handle it, that College Football will be number one and surpass the nfl because the nfl had thats the they had the goose that laid the golden egg theyre screwing this up i think the owners are, i think goodell is did you look at this and say this is an unfortunate situation . I always felt athletes had a tremendous opportunity to be leaders, to affect social cha e change you hate the see a situation handled but the nfl wraps themselves in the flag. They have a flag that covers the entire field with flyovers of military jets and they have guys sitting during the you cant do both. And at all College Events honoring the flag and our country and National Anthem is an important part of the tradition and so its something we value but i certainly dont cheer for any other sport to stumble. I dont either. But im you know. Guys make a lot the guys that are over there in afghanistan are making in iraq are making 20,000 a year and these guys are making 5 million a year. I was at Arizona State the other day for a football game, pat tillmans statue is in the end zone before those players come out for every single game they touch the pat tillman statue so honoring the tradition and service of americans is an important part of tradition in College Football. Im only watching nbc televised nfl games from here on out. Anyway, larry, thank you. Thanks for having me. Appreciate it. When we come back, move over electric cars, here comes electric planes. A startup that is attracting support from boeing and jetblue is ready to unilve its next model. Phil lebeau will bring us that next people dont invest in stocks and bonds. They dont invest in alternatives or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. Its a warm blanket. Its a bottle of clean water. Its a roof and a bed. Its knowing someone cares. Its feeling safe. Its a today thats better than yesterday. Every dollar you can spare helps so much more than you can imagine. Please donate now to help people affected by hurricane harvey. Your help is urgently needed. Its not just a donation. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Theres the electric bus and car and now new details on planes for an electric plane phil lebeau joins us from chicago with the details the tesla and acceleration changed everyones idea that planes with torque, but i cant believe it can lift a 747. Were years from seeing it happen with huge jumbo jets. Lets look at the zunum aero details are being released about this 12seat hybrid electric plane. This is animation from the company. The first wont be delivered until 2022 the big selling point here is that the cost of lithium ion batteries as they come down, as the weight comes down, the people at zunum believe this will be more Cost Effective for operators on a cost per seat mile basis when the first ones come out next decade but will people be comfortable flying an electric plane they think they will be. By the time this aircraft is in the air in early 2020, everyone will have ridden in an electric car or ridden in an electric bus this will be a nonissue. Here are the Details Behind the suh numb aero. Seats up to 12 with a range extender gas turbine engine. Could go up to 700 miles they say it will be 80 lower emissions, less noise and the funding, of course, as we mentioned earlier, some of it from boeing as well as jetblue and i checked just for you, joe, there are two configurations where you could get a lavatory in the plane so i know thats a concern of yours wherever i do these stories. If you s. A. T. Here on set for three hours everyday youd see its a real concern, phil. Dont b. S. Me, how old are you are we going to talk depends on squawk box . Is this what this came down to catheters, depends, i dont know. Im a little younger than you but i know youre always interested in finding out planes need bathrooms im not flying to just boston, i might be flying to l. A. Planes need long charges. Huh planes need long charges, too. Right they need long charges, too. But, yeah, phil, is that too much to ask . Youre sitting there im afraid of the panic that might set in. Two configurations have it on this plane so youre okay. Thanks, phil. He wasnt the stuff of legends. There was no magic up his sleeve. He didnt have wings, or a cape. He was but just a man. With the will to go beyond. This s electricity. This is a power plant. This is tim barckholtz. Thats me this is something he is researching at exxonmobil using fuel cells to capture Carbon Emissions at power plants. This is the potential. Reducing co2 emissions by up to 90 . While also producing more power. This could be big. Energy lives here. The first hurdle for tax reform, a key vote in the house. On the agenda, a Ranking Member of the Budget Committee Philadelphia Fed head talks about job hikes. Plus, the executive producer behind this popular show. You always left me satisfied and smiling, so thats what she said now betting on new content platforms, well be hear to explain as the final hour of squawk box begins right now. Announcer live from the most powerful city in the world, new york, this is squawk box. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Market side in times square, im joe kernan along with becky quick. The futures are indicated higher again this morning, up 16 or so, the s p up two and a half, the nasdaq indicated up 16 and ive lost count of new records and what do we call them fresh new highs as opposed to the smelly rotten high. There were 41 or something the other day for the s p. Just for this year. As we pointed out, 24 on the dow since the election thats a quarter almost. Thats why youve seen a lot of new highs. A lot of trillions. Pretty steady march, too. Russian president Vladimir Putin and saudi Arabias King Salman are meeting at the kremlin. Saudi arabia and opec are lobbying russia to stay on board with their efforts to raise oil prices after signals that moscow wants to end participation in production cuts. This is the First Official visit of a saudi monarch to russia r russia among the headlines so far, saudi arabia says the territorial integrity of iraq must be preserved. Hes calling on the United Nations to set up an International Center to fight terrorism. Russia says putin has accepted an invitation to visit saudi arabia as well in Business News today, shares of fedex and u. P. S. Both falling after reports that amazon is experimenting with a new Delivery Service the Online Retail giants new service would reportedly be aimed at making more Items Available for free twoday shipping you can see fedex is down by 2. 8 , u. P. S. Is down by 2. 9 weve known for some time amazon has been playing around the edges when it comes to fulfillment and delivering that last mile but if you look at shares of amazon, theyre up by just over 2 today. If i knew how to watch amazon prime tv at home, if i knew how to log in, could i log into amazon prime and buy this im going to buy this book by the guy who just won hes got a new book. Youve never bought anything on amazon . Um, i should yeah, i have. Ive had people do that for me. The royal we have bought this is a penelopes bought stuff on amazon. The kids have . Oh, my god, theres packages everyday. My life i asked someone to do it for me does that count if i ask no, well get you you know what theres an app, well get you on and you can buy the book on the end of the phone amzar a amazon let me google that ive never been on facebook and im getting off twitter, its a cesspool lets go toy latoy lann mui. The senate will be voting to get its budget out of committee. The deal in the senate for a tax cut is worth 1. 5 trillion senator bob corker said yesterday he will vote for this budget but eventually he wants to see a tax plan that reduces the deficit or he wont support it it does feel like to me up here its party time that serious issues, serious discussions about fiscal issues are not going to take place. Theres been a lot of sugar talked about over the last couple weeks, there hasnt been a lot of spinach. Its democrats, though, who have been sounding the alarm about the impact of the tax plan on the national debt. Republicans spent years pretending to care about the deficit when it came to making cuts to middleclass priorities but the minute came to handing tax breaks to the rich, that all went out the window. Are we adding to the burden of debt for our children and our grandchildren . All the rhetoric aside, the budget resolutions in both the house and in that Senate Committee are expected to pass today. It will still be a couple weeks before the two chambers reach an agreement on a final version and, guys, we are not going to see a tax bill until all of that is wrapped up. Back over to you. Ylan, thank you very much for more on this, lets bring in Budget Committee Ranking Member john yarmuth. Thank you for being with us today. Good to be with you, becky. We know theres still a lot that needs to be worked out. What can you tell us its hard to assess this stuff until we know the details. This is an alice in wonderland process right now. We have republicans who are opposed that will vote for it today, we have people like senator corker who raise alarms about the Senate Budget but they will vote for it this is about moving forward with what we call reconciliation that allows the senate to pass tax reform with 51 votes as opposed to 60. So were fighting about the budget because we believe that the republican budget represents a drastically wrong set of priorities for the American Public and the government. But really this is about tax cuts for the very wealthiest and the corporations and thats where the debate is going what the debate will end up being about. I mean, its maybe that on the headlines, it may be the rhetoric but what i pointed out earlier to another democrat is you guys arent even in the game we wont know if youre going to be until we figure out if the republicans can decide amongst themselves if they can pass the budget, if they get 51 votes, it doesnt matter what you or anybody else says. Well, thats exactly right. And what were trying to do is, again, raise alarms about what this means for the country the tax cut which is will disproportionately go to the wealthiest americans one estimate is that in 202780 of the benefits the tax cuts as outlined last week would go to the top 1 . 45 of middleincome americans would see their taxes increase according to that analysis so there is a lot to be concerned about and the fact that the senate is moving so inevitably toward doing this without any democratic participation, as you mentioned, indicates what they want to do they dont want to have our input because they know where they want to go and its to eliminate the estate tax, eliminate the amt, cut the corporate rate, allow pass through income to be taxed at 25 . And to lower the top rate from 39. 6 to 35 so we know what they want to do and they dont care what we would like to do. So, congressman, when you say the republicans want to cut the rate on corporations, when you say that its like a pejorative and you say it with a straight face and you understand that we have 35 rates here and you understand that a lot of stuff gets moved to other countries. I mean, you really want to does the entire Democratic Party want to stick with that . That corporate rates should be going up, not coming down . It really wouldnt help if our corporations were more competitive globally that wouldnt accrue to any middle americans that might get wage increases or bring manufacturing jobs back here is that really your stand that lower corporate rates are something we shouldnt try to do well, let me say this i think there are a lot of democrats and myself included who wouldnt be averse to lowering the corporate rate to a certain extent the question of pass through is what concerns me most. Okay, but you use that as a pejorative you said they want to lower and thats just i mean, it works with a lot of people, the public still thinks that maybe corporations are these terrible greedy entities that just want to steal your well, some are, some arent. If you know better i dont know if you should still use that as a demagoguing point. Well i agree. Heres what i would also say, there was a study recently of 90 major corporations who pay 20 or less in federal tax and it indicated that over the last five years, they collectively actually cut 300,000 jobs. So there really is not a lot of evidence that when you cut the corporate rate it accrues to the benefit of workers, it accrues to the benefit of the economy in general. Yes it helps taxpayers and ceos and they can buy their stock back and do all those things so im much more interested in cutting taxes for corporations if i understand that and am convinced it can help the American People not just because it can help ceos. You know theres trillions of dollars that are not on these shores that are left over there where tax rates are lower and companies go and make things over there where tax rates are lower. You wouldnt rather have that money back here . Absolutely. Absolutely and ive been a cospore son of John Delaneys bill here which would allow repatriation of earnings if a certain portion of it is dedicated to rebuilding infrastructure i think thats a great idea. But the last time we gave a tax holiday on overseas income, all of that money, virtually, was used to buy back stock and pay additional dividends. Dont a lot of your constituents have Pension Plans and 401 k s . Youd rather if it goes back to if it comes back here for dividends and stock buybacks and stocks go up, those are bad things does it go to the ceos or some of your constituents that have retirement plans or that might own stock . It does theres no question a portion of it does. But, again, id like to see some concrete benefits for every american from some of these proposals rather than just some americans. I dont know, we did a lot of redistribution for eight years and never got above 2 , maybe we should try something that unshackles private industry and Corporate America and see what happens. Weve got the stock market up 24 for some reason since the election you like that, right i like that. Youre a kentucky guy people in kentucky have stocks. I do, too im very happy about that. Okay, good. Thank you. Thanks, congressman. Weve talked before, ive from cincinnati so i know you i know what youre all about i love entucky were closer to kentucky in cincinnati than ohio really. Doesnt really make sense. And the Cincinnati Airport is in kentucky. Exactly our airport is in kentucky i love the bluegrass state thanks for putting up with those questions, appreciate it just making a point. Absolutely. Thanks congressman, appreciate it. New details i merging about the mass shooting in las vegas Nbcs Jay Gray is there and, jay, we appreciated your reporting out there, thanks for joining us today thank you, joe. And, look, as we move forward, investigators trying to piece together a timeline for the gunmans life before the attack, police for the first time suggesting that at some point maybe he had some help. Keep your head down go reporter four days after the massacre in las vegas, the investigation is growing. More than 100 investigators have spent the last 72 hours combing through the life of 64yearold Stephen Paddock to produce a profile of someone i will call disturbed and dangerous. Reporter there is new information this morning, including this stunning revelation from Sheriff Joe Lombardo reporter do you think this was accomplished on his own . Face value, you have to make the assumption that he had to have some help at some point reporter while police dont know where the help may have come from, the investigation has revealed a significant amount of explosives in paddocks car, thousands of rounds of unused ammunition in his hotel room we also now know some of his guns apparently jammed during the attack and while they wont say what it is investigators do say there is evidence paddock expected to survive and escape after the attack federal agents have spend hours talking with his girlfriend Marilou Danley and say shes cooperating fully with the investigation. She also shared a statement through her attorney. I am devastated by the deaths and injuries that have occurred and my prayers go out to the victims and their families reporter victims and families that, like investigators, continue to search for answers here. In the days leading up to the attack, paddock was seen with another woman, police dont know who she is, theyd like to identify her and speak with her. We also now know he spent hours gambling before locking his Hotel Room Door and turning his weapons on the crowd below joe, a lot of questions still linger here. Its getting its really, its bizarre at this point, jay, and none of us know what to make of it but we appreciate you trying to make some sense of it thank you, jay gray. Coming up, our whats working series continues this time were looking at the winners and losers in the industrial sector. Well talk to an analyst next. Plus a cnbc exclusive interview with Patrick Harker, a Voting Member of the fomc this year well bring you that conversation live at 8 30 a. M. Eastern time then betting on content. Well talk to Ben Silverman, executive producer of shows like the office. He joins us on set to tell us what we need to do to be better here on sawbo wchou e tching on cnbc well, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Welcome back to squawk box, everyone take a look at shares at inovio pharmaceutical the companys experimental zika vaccine showed promise in an early human trial that prompted antizika immune responses in human patients we didnt talk much about zika this year. Thats the first time weve said it, i think. U. S. Manufacturing expanding at the fastest pace in 13 years. Joining us with whats working in the industrial sector, the Global Infrastructure group cohead at William Blair and this is another one of those welcome, good to see you this is another one of those subjects where there are decidedly two opposing sides about what were capable of here now in this country, about whether it can come back or whether its going to continue to exit because of labor or whatever makes it maybe youre selling it over there so maybe youre going to manufacture it over there. Do you think theres policy that can bring it back here in a tangible way or not . I think its started. Last year we saw 25,000 net jobs added from in sources or reshoring. We lost 220,000 between 2003 and 2013 on average. So thats what do you mean on average a year . On average in manufacturing per year . Per year. So this is a big shift. Million ises of jobs. Weve already started to see on on shoring back youve seen in the the petrochemical refining sector because we have low cost in much greater conti coming out from the nonconventional sources so well, a lot has happened. A lot of manufacturers are figuring if you want to sell in the u. S. , you better make it for the u. S. We dont have a law like the eu does for domestic content but for a Transportation Logistics standpoint, it makes a big difference. Does an uncompetitive number one, is it uncompetitive . People that dont want to lower it say no corporations pay it anyway. Theyve worked around it a lot. Look at whats going now would it help if it comes down to for people to be back here i think so but, you know, i think right now theres much more structural change that is going on in many of the key industrial end markets rather than legislative or health care or tax reform or anything like that. So it almost doesnt matter, youre saying . Companies figure out ways to reduce their tax base. Look at the ip companies that have moved their intellectual property anywhere to take advantage of ireland and luxembourg. We lost a lot of farming jobs at one time. Yes. Decades ago. We didnt want them anyway because they werent going to be we want to be the most productive country in the world in terms of agriculture but you dont need people out manually plowing fields do we want People Manufacturing here we cant all be Service People can we no, but were about on the cusp probably to see more and more pervasive use of robotics people think robotics is a net loss of jobs but every robot actually creates 2. 7 jobs for the one thats replaced . What . You cant believe that . Theres servicing, programming, coding. But theyre different types of jobs. Theyre not the type of jobs that you can come out of high school and get a job for the rest of your life. The countries with the most robots in the world china and germany have the lowest manufacturing unemployment. So thats not necessarily just like Everything Else theres a lot of misperceptions but were seeing our smallest best Engineering Manufacturing Companies design their own clap arty robots and deploy them in low cost wage regions like mexico and czech republic. Is there also things we can do with regulation or deregulation to help this trend continue in terms of manufacturing . I think innovation is here whether were shifting away from the fossil economy to the electrified economy, were right on the cusp of that almost like a light switch when you come to 100 a kilowatt for temporary storage of electricity you already can generate less renewable on fossil than a cost basis. So its going to change how we run our cars, our trucks, our trains, its changing today how we run our ships we have autonomous operation. You mentioned autonomous planes i have issues trying to think about an electric plane, not interested in getting on one of those at the moment. Think of it as a big drone. Just happens to carry you and me. No way. Well, you know, we have it digitized, global gps system for air Traffic Control that is on the cusp these are the things that need to change as opposed to tax reform were still running in the analog in the u. S. Mexico and canada has a digital system already. Theres been a push for that for years and years. I wrote a column for fortune probably five years ago about that why hasnt it happened particularly at a time when youre dealing with 30 Interest Rates . Theyve tried several times to upgad it and spend 20 billion in the first try and 14 billion on the second try so theres a factor that were going to spend more money that we dont get returns on. Whos your favorite manufacturer right now right now i would tell you theres the opportunities because the industrial side has swong around so much and its back globally, youre trying to find companies so dominant in their niche that they can still take advantage of this much stronger Free Cash Flow that theyre generating to redeploy acquisitions so to think of them as the funnel for privatizing all of their smaller independent privately Held Companies that maybe run out of the third or fourth generation and they can pick them for eight or nine times and that in turn allows them to supercharge, theyre already strengthing and accelerating core end Market Growth so that would be a kay dent, that would be an rbc bearings, that would be crane. These are companies that, you know, you cant do this if how about ge, nick . Ge is all about fixing the cash flow and hes doing a radical trunkication of the cost structure. It wasnt broken, it was bloated, it will be a lot less bloated vrm youll see ability to sustain dividend and increase it later this decade and youll see a much more leaner. Great having you on today. Thanks. When we come back. Philly fed president Patrick Harker will join us at 8 30 a. M. Eastern time stick around, squawk box will be right back. If youd have told me three years ago. That wed be downloading in seconds, what used to take. Minutes. That guests would compliment our wifi. That we could video conference. And do it like that. snaps if youd have told me that i could afford. A gigspeed. A gigspeed network. Its like 20 times faster than what most people have. Id of said. Id of said youre dreaming. Dreaming definitely dreaming. Then again, dreaming is how i got this far. Now more businesses in more places can afford to dream gig. Comcast, building americas largest gigspeed network. Now more businesses in more places can afford to dream gig. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Good morning and welcome back to squawk box on cnbc live from the knack dak market site in times square among the stories front in center, shares of Constellation Brands are jumping in premarket trading. This is one of the reports we were watching today. Spirits maker reported a profit of 2. 47 a share, well above the 2. 16 estimate revenue beat forecast. Constellation amgs raised its fullyear guidance thats a nice chart to be sure seaworld is another stock on the rise uk theme park operator Merlin Entertainment has reportedly approached seaworld about buying a steak. Yup, i know this company because theyre the operator of legoland and also madam tussaud which some day, becky, someday, someday youll have a wax figure . Both of us. Just us. Seaworld is said to prefer a sale of the entire company heal Health Insurer cigna will end Health Coverage for oxycontin on january 1. It will offer instead a differe different oxycoddoneoxycodoneg the drug cant be made more powerful through cutting it or crushing it. Thats interesting maybe they should have thought of that five years ten years ago. For anybody who will be listening to cyber hacking stories out there, including what happened with equifax, with yahoo listen up, heres a great story. Amazons alexa has a new skill the technology struck a partnership with nissan and users can unlock vehicles by asking Voice Assistant to do it for them certain models made between the years 2016 and 2018 will be equipped with technology that allows alexa to flash headlights, honk the horn. Alexa, honk my horn. Yeah, that will be fun this is not the first time amazon teamed up with an automaker. Bmw said it will be in its 2008 models, too we are a few seconds away from weekly jobless claims Rick Santelli is standing by rick, take it away. Good morning. We have data were looking at our august read on the trade balance which is a trade deficit which is dash close to expectations, its red ink, 42. 4 billion following the minus 43. 6 billion jobless claims, 260,000, down a dozen, down 12,000 from an unrevised 272 and it seems to be getting in line more post those horrible storms, getting to an area where its more trustworthy. Continues claimings in arrears move from 1. 936 million to 1. 938, lets call that a lateral move here we sit at 232 this is the interesting thing, bucky, this could be the seventh trading day where tenyear notes close between 231 and 234. Theyve had a lot of flat plateau areas all year, very similar to equities. Low volatility, tight closes, this isnt the symptom of a market at a major turning point. Usually you get your most volatility at tops and bottoms, becky, back to you. 24 on the dow since election day, rick. Yeah. Thats it. Im sure its a coincidence, has nothing to do with who did or didnt get elected, right, joe i guess its it was all in motion, rick, right . Yeah, it was all in motion. The consider had been driven into the ditch, pulled out of the ditch but then the keys did get given they did give the keys back to the people that drove it in the ditch. That doesnt make sense. Ill tell you what. We always look to somebody to take care of our issues, our problems, whats wrong the American People are good at dealing with this on our own its horrible that the government wants the keys to all cars, they want to drive everything they want us all to be passengers but the problem is theyre not great chauffeurs. All right, i didnt want to get to actually, leishmans coming up, we can leave you here but he has Something Different to do. But maybe lets you know, well reserve a place we should talk about why you have to have a ph. D. To be fed chairman thats what i want to know seems like the ph. D. S of the past have done such excellent work in telling us about these road hazards ahead of time. Go back down, who is supposed to read this i forgot you. Rick, thank you very much in the meantime. Lets get to see the leishman from austin, texas, with a cnbc exclusive and an exclusive guest. Steve, good morning. Good morning, bucky, always a pleasure, thanks very much im here with Patrick Harker, the Philadelphia Fed president and maybe we can put those questions to the philly fed president , thanks for joining us. Good to be with you. So lets talk about the first thing that happened there and im amazed, 260 on the jobless claims they never seem to spike in a postharvey postirma environment here. This is an incredibly resilient economy. You just think about the resiliency that this economy as shown quarter after quarter, year after year. You dont have a ph. D. In economics but you do have a ph. D. Answer ricks question do you need a ph. D. To run the fed . You need a deep understanding of the economy and markets for sure thats critical. You also have to have other kinds of skills outside of academic training. Good business experience, pragmatism, i think pragmatism is important and the ability to build consensus because the fed is a Consensus Organization ultimately. So what is the limitation, then, on the ability of the president to appoint somebody who would be a disruptor at the fed . Well, the first question you have to ask yours, i have to ask myself and i can only speak for myself is disrupt what the economy is doing very well there are issues theres always issues but one needs to work with not just the other members of the fed but other entities throughout the government to make those changes so i think that skill of being a consensus builder and team player is important. The main point of critics when it comes to criticizing the fed is the lackluster groit rai gret rates, this idea were only growing 2 and that thats the result of the quantitative easing of the low Interest Rates. Monetary policy is there to support the economy, it doesnt drive Growth Growth is fundamentally businesses making investments, workers getting the skills they need. But what about this idea that its business that quantitative easing drove down business investment. Youve seen that idea from kevin warsh, even nobel prize economics winner mike pence put that out there. Sure. But at the time you have to put yourself back monday morning quarter backing is always easy consider the crisis at the time. I wasnt at the fed at the time but plarp the at tewhat were ths the argument would be doing nothing and letting the market take care of itself. Well, at that time the Decision Makers thought that that was not a wise do you think it was wrong looking back we look at where the economy is today relative to how we bounced back from the recession relative to other global economies, it seems to have played out pretty well. Heres another big criticism. This iscoming increasingly fro the Federal Reserve. Yesterday dan you are the rouleau said there is no inflation theory that works for making Monetary Policy a week ago fed chair janet yellen said, you know what, maybe we dont really im not sure about how the inflation dynamic works. To what extent is the Federal Reserve flying blind in that it doesnt seem to have a good working rule to predict inflation . There are issues and a group of our economists put a paper out that showed that the phillips curve has not been a good predictor for the last several decades. So this is not just a new phenomenon, its happening for a while. That doesnt mean we cant make policy in these sort of situations where you dont know whats under the hood you can still drive the car, you just have to be pragmatic you cant push the car too far in either direction. You cant step on the accelerator or brakes too hard you just need to be pragmatic. Lets be pragmatic and talk about the nuts and bolts in terms of your outlook. We had a bumpup in growth in the Second Quarter it looked like that was going to continue in the Third Quarter then the hurricanes came off and we shaved off anywhere from a half point to a point. Whats your sense of the underlying growth rate of the economy . Where do you expect to end up . Lightly above two until we see other changes on the fiscal side of the house were not going to move that growth rate too much. If the current tax cut came through as proposed in the outline, would you change your growth forecast . Maybe, but i would have to see exactly what the details of that tax plan are. Theres not enough details now . Not in my mind. Lets talk about your outlook for rates. We talked i guess back if march, you were kind of on board this third rate hike. Do you remain on board i pencilled in a third rate hike in december. Youre still using pencil we have to see how the inflation dynamics play out. If we step back from being a central banker or a commentator on cnbc or a banker, the rest of the world, the rest of the economy thinks its a good economy. Low inflation, low unemployment so we have to realize that while there are issues here with respect to low inflation because it doesnt give us the leg room we need in case theres a negative shock in the economy, its not a horrible situation. We looked at the smart chavez up earlier, 24 increase in the dow jones since the election of the president. To what extent do you see that as a positive force to the economy . To what extent does it give you concern the market is overvalued i think there are concerns on either side. On the Positive Side it gives companies more money to invest for the future and if they do that, thats good for the economy to add to productive capacity of the economy. I have two more questions i have to ask you. Pencilling in the third rate hike for december, what about 2018 i still have three rate hikes in for next year but well have to see how the dynamics play out. Lets talk about the conference were at which is work force development, one of the titles of one of the agenda items is the future of work and i had to look at that. Is there any we talk all the time on squawk box about the robots are going to come in and take over the work and theres no way to train the workers for the future jobs. No, were always going to create new jobs go back 10, 20 years ago. Did we have web designers . No were always creating new jobs but we have to continue to focus on work force develop. I think one of the limiting factors, probably the limiting factor in growth is not access to capital although for Small Businesses thats an issue its the inability to get the skilled workers, this mismatch between what Companies Need and what workers know is real and growing and thats why this conference is so important, finding ways to help bring people productively into the work colors thank you for joining us today. Thanks. Back to you guys. Thats a ph. D. Guy but not a ph. D. In economics. And youre glossing over that president harker, urban and Civil Engineering and then he was professor and chair of the Systems Engineering department at penn at the school of engineering, this is a guy who should be running things, actually, at the fed, you glossed over that leishman. Joe, he can hear you if youd like to talk to him. President harker, off bs, ms and ph. D. From penn . Do you know people there still do you have any pull there a little bit. He has a daughter and hes basically outranking any guest with any connection with any university to help get his daughter who, by the way, his daughter is very accomplished and lwill have no problem gettig into school but dad wont let go. I thought id ask. Let it go, shes great, joe, shes very accomplished, very smart. I think honestly, you know is economics really a science, really if it is, its a dismal science. Anyway, thank you gentlemen, thanks, steve and thank you president harker coming up, the new world of content. Arwiinawdnng producer Ben Silverman will joining us next is the monolithic view of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Theextreme risk of burstd a pipes and water damage. Y. Soon, Insurance Companies wont pay for damages. That is, not if they can help prevent damages from happening in the first place. 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I should take a closer look at geico. You know, geico can help you save money on your Homeowners Insurance too . Great geico can help insure our mountain chalet how long have we been sawing this log . Um, one hundred and fourteen years. Man i thought my arm would be a lot more jacked by now. Im not even sure this is real wood. Theres no butter in this churn. Do my tris look okay . Take a closer look at geico. Great savings. And a whole lot more. Pthey dont invest inn stalternativesds. Or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. Beautiful. Were on now [ laughter ] new york citys come con gets underway today contents creators and producers are looking for the next big thing or actually in this case the next big thing is a person joining us now, Ben Silverman coceo and chairman and former cochairman of nbc entertainment and universal media studios. Youve got youre like how many things can you juggle people can get to six balls, cant they you have almost six. Big week for us to propagate. Whats the first thing . Whats in the front of your mind right now . Next friday night weve got the premier of lure on amazon which is an incredible show based on a podcast, like the ultimate creation of the modern media age, finding ip through a podcast, aaron minkes lure which is one of the biggest podcasts in the audio universe and turning it into a Television Show and partnering with amazon to deliver. It it sounds spooky youre putting it out on friday 13. Of course. Vampires, werewolves, all kinds of spooky stuff happening. Exactly lore as in are they real stories . Are they not real and diving into really scary stuff and an incredible new high braid way of story telling. And you have people from the walking dead who have involved with this. People that we would be joe and i are big walking dead fans yeah, the producer of the walking dead, our coproducer and we put together a scary team on the other side of the dial for our other fans who dont want to be scared as much we have jane the virgin premiering on broadcast based on a format from venezuela so projects from all over the world, ip generated in so many different places and so many different outlets for content. Lucky they you have a really good feel for where the media is converging now with ip, i guess, right i do feel like very connected to it. I think ip is more and more important but only when its then married to the brilliant talent that can execute and deliver on it so if its not for Gina Rodriguez and jennier man, jane the virgin could be a good idea that never manifests into a great show. And with lore the same thing we just got a great review and were pumped and think it could be not only scary but a game changer. Im excited is it going or the serial or separate is it going to be a stand alone episode . The episodes are stand alone but through amazon you can watch them all as you want a la carte and the premier will be next friday so hopefully everyone will stay home and get scared. Is there ever a shakeout in terms of so much stuff getting thrown up against the wall i hope my speg tspaghetti sto the wall but there is no question we are producing in general more and more content. I need it i need more content. And more and more players are getting involved but i only know the litmus test of whats the Dinner Party Conversation and what was what movie did you go see three years ago is now what are you watching and thats everywhere i go so i think there is an appetite but you cant watch all this stuff and i know you had larry scott on earlier tonight and hes talking about maybe we do the lacrosse channel, maybe we do the swimming channel, maybe we do, you know, these microniches as well and i think around content itswell i think around content its the same thing the jane the virgin fan may not be the same fan as the lore fan and maybe you can find your own bespock content. Were seeing so many different providers paying for so much content, but the reason it always made sense under the broadcast version is you could allocate those eyeballs all in one place. If you cant do that anymore its harder and harder to get paid for a hit. It absolutely does, so youre forced to juggle six balls to make up for what would have been juggling two, where the downmarket revenue is isnt as clear. It was when they came in to buy library content, and used to make up the money on the office or seinfeld or friends, but now youre seen and everybody is ready, too the movie actors, great writers, great directors. If its am op, its amazon theres no longer any stigma, im only do we saw reese witherspoon, nicole kidman, the biggest names are here, and i think they like telling stories. What we like about tv is the intimacy of being in your living room you feel so connected to these characters, and watch somebody develop episode by episode, season by season that character portrayal for an actor is phenomenonally fun. We do that here on squawk box. I feel that youve become incredible characters. Exactly, and thank you. Thank you both. I thought you were going to guest host for an hour. Soon. This is what the new producer does and why everyone says content we have a show premiering saturday night on animal e. R. We gotta go i write them a poem instead. And one for each of you too. Woman cool. That actually yours. That one. Yeah. Regardless, were stuck with the bill. To many, words are the most valuable currency. Last i checked, stores dont take words. Man some do. Oh. alert beeps not everyone can be the poetic voice of a generation. I know, right . Such a burden. Settle up with your friends on october 17th with the bank of america mobile banking app. Settle up with your friends on october 17th thats why a cutting edgeworld. University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. The fine quarter of the year has kicked off consumer lets get down to the new york stock exchange. Jim, weve been running some bits from bill ackman on your show last night. What did you think on his take on adp do you buy in . Is he right . I think they are so so i think he made an impression. The problem is the total shareholders return, depending on how you measure it isnt that bad. The way that ackman wants to measure it, he thinking a lot of the spike is him, but becky, in order to beat these guys, youll have to have more on them than just how much youre making per employ employee they got fat and happy they should have been more tech and more service now, and they missed those big opportunities. I hope we hear more about it squawk on the street. Tomorrow dont miss the interview with nelson pellets. Thats at 7 30 eastern time. Well be right back. Hey, ive got the trend analysis. Hey. Hi. Hi. You guys going to the Company Picnic this weekend . Picnics are delightful. Oh, wish we could. But were stuck here catching up on claims. But we just compared historical claims to coverages. But we have those new audits. My natural language api can help us score those by noon. Great. See you guys there. We would not miss it. Watson, you gotta learn how to take a hint. I love to learn. whoo woman class, lets turn to page 136, recessive traits skip generations. molly i reprogrammed the robots to do the inspection. Its running much faster now. See . Its amazing, molly. Thank you. sky news is reporting that the uk Prime Minister theresa may has no plans to resign her bid to reassert her authorities was ruined by a disastrous speech to a conference a speech to her party was interrupted by coughing fits why does that sound familiar at one point . And a protester walked up and handed her a notice that she had been fired then watch this. That was the sign behind her literally falls apart. Reto or everyone. Remember the sign fell on someone . This is right before she got handed the pink slip essentially. Well, thanks for being with us today youre welcome. Join us tomorrow squawk on the street is coming up right now good morning welcome to squawk on the street. Im scott wapner with jim cramer david faber is on assignment see how we are setting up for this day on wall street. S p with an implied open, and so woul